TransDigm Ends Investor Suit Over ‘Staggering’ Board Pay Claims

TransDigm Group Inc. and its senior leaders have reached a deal to end investor litigation over claims that the aerospace manufacturer overpaid members of its board and management by “staggering” amounts, according to court filings in Delaware.

The agreement would restructure “dividend equivalent payments” on vested but unexercised stock options so they’re recognized as a reduction in the strike price, rather than paid out in cash. The move would save the company $23.8 million, according to settlement filings in Delaware’s Chancery Court.

The pact also provides $2.8 million to counsel for the TransDigm investor who led the case, plus a $4,000 service award for the shareholder. Because the case was a derivative lawsuit, the agreement requires the approval of Vice Chancellor Lori W. Will.

The lawsuit, filed in November, accused the manufacturer’s compensation committee of approving $68 million in 2020 compensation for its executive chairman and $22 million for its CEO as part of a quid pro quo aimed at buying their approval for the committee’s choice to overpay itself.

TransDigm didn’t respond to a request for comment at the time the suit was filed. The settlement isn’t an admission of wrongdoing or liability, according to court filings. The agreement was docketed Aug. 19.

Farnan LLP and Levi & Korsinsky LLP are counsel for the investor. The company and its leadership are represented by Morris, Nichols, Arsht & Tunnell LLP and Wachtell, Lipton, Rosen & Katz.

The case is Sciabacucchi v. Howley, Del. Ch., No. 2021-0938, stipulation filed 8/19/22.